IR needs to help educate investors about IFRS

From the Cinaport Blog - IR needs to help educate investors about IFRS and its impact: http://post.ly/1Ga5k

The changeover to International Financial Reporting Standards (“IFRS”) in Canada begins on January 1, 2011. With the deadline for the IFRS changeover fast approaching it is becoming clear that investor relations professionals will have to help educate investors about the differences between accounting standards and the impact that the changeover will have.

According to the results of a recent members survey conducted by the Canadian Investor Relations Institute (“CIRI”), “a significant portion of the Canadian investment community is not prepared for Canada’s transition to IFRS.”

“What really jumps out is the important educational role that investor relations professionals play in this transition,” said Tom Enright, President and CEO of CIRI. “Australian research shows companies that proactively provided a greater level of IFRS disclosure during their conversion to IFRS in 2005 benefitted from more accurate analyst forecasts. Therefore, we applaud those Canadian Issuers that have provided and are planning additional communication efforts to assist the Street in understanding the impact of IFRS. I strongly encourage other companies to follow suit.”

In Canada, IFRS first, XBRL second

XBRL will allow financial information to be extracted from an issuer's financial statements and compared instantaneously. This will potentially save analysts, regulators and other users considerable time, while creating a level playing field in terms of information access.

So why do Canadian security regulators appear to be taking a wait-and-see approach to mandating the use of XBRL?

Well, it really is a matter of timing. TSX and TSX-Venture listed companies are preoccupied with the challenges of converting to international financial reporting standards (“IFRS”) by the start of 2011.

According to James Turner, Vice Chairman of the Ontario Securities Commission, "Canadian regulators shouldn't require the adoption of XBRL before IFRS is implemented in Canada. From our point of view, the right sequence of events for our capital markets is first to make the transition to IFRS then adopt XBRL as a mandatory requirement."

In the meantime, he encourages the voluntary use of XBRL across Canada.